Thursday, October 02, 2008

Response to Rich Rifkin's Column on Parcel Tax and District Fiscal Management

In last night's Davis Enterprise, Rich Rifkin, certainly no stranger to this blog, presented his analysis of Measure W.

In his column he presents numbers on the district's fiscal situation. I both agree and disagree with his findings. And I agree in part with his conclusions.

Let us begin here:

"In the 1997-98 school year, the Davis school district had $4,995 to spend per student in average daily attendance (ADA) revenues. Ten years later, that had grown to $7,972, a 60 percent increase, which equals a compounded annual inflation of 5.33 percent. On top of the ADA money, the district receives funding from other state and federal sources, as well as our local taxes.

Had the ADA revenues simply kept pace with inflation over the past 10 years, our district would have had $6,517 in ADA money per student. That's $1,455 less per child than we are actually getting and spending."

He then writes:

"The answer is clear: The school board has been increasing salaries and benefits (for teachers, staff and administrators) at an unsustainable rate."

And we can pin the culprit to the 2005 and 2006 school years when certificated and classified salaries increased by 7 and 11 percent.

The genesis of this problem was a memo sent out by then-Davis Joint Unified Superintendent David Murphy to the Board of Education dated September 20, 2006.

"In this memo are factually incorrect statements that ultimately led the school board to approve a 6.5% teacher pay hike based on claims in it that the district had the funding available over a three-year period to pay for this pay increase. At the time this was a factually incorrect assessment. According to sources however, it is likely that neither the Superintendent nor the interim CBO were aware of this fact."

The board was told that they would have to use one-time reserves the first year of this pay increase in order to cover the expenditures. After that, monies would become available on an on-going basis to pay for the salary increase. The board was told that this increase would thus only require a one-time use of one-time money. As it turned out, this was not accurate either.

The three-year ongoing fund projection was wrong. There were at least two glaring errors in it.

First, the budget was missing some positions that were being paid $400,000. FCMAT discovered this in their report to the school district.

Second, there were changes to special education funding that were not factored in and this accounted for nearly half a million dollars in expenditures. Both of these errors accounted for $900,000 or just under half of the money spent in the salary increase.

The district would keep itself fiscally solvent and the budget on the positive side by spending the district's voluntary (as opposed to the state mandated) reserves. As those reserves have become depleted however, the district has run into huge fiscal problems.

What is the root of these problems? According to a board member at that time, the problem largely consisted of problematic budget tracking procedures that were in enacted under Tahir Ahad.

The new board has taken steps to correct this problem.

So when Rich Rifkin writes:

"What needs to be done going forward is some responsible financial planning by the district. Whenever money rolls in - as it did during the housing boom - our school district spends it as if there is no tomorrow. They agree to contracts with huge inflators, under the assumption that the good times will never end. And then when they do end, all they can think of is to raise another parcel tax.

Instead, the school board ought to cap the increase in per-pupil spending on all programs at 3 percent per year, regardless of how much money they get from the state. In good times, this will result in a large surplus. And in bad times, the district will be able to move forward without a crisis or a tax increase."

I completely agree with Mr. Rifkin's assessment and I believe that every member of the current school board completely agrees as well. The board has worked very hard since the departure of the former Superintendent and CBO to put the district on sound fiscal footing.

The other point that Mr. Rifkin does not make is that even with the increase of spending over the last 10 years, California and by extension Davis' schools still have remained substantially below the national average in terms of per pupil spending.

As Michael Hulsizer cites in his recent letter to editor now posted on the Measure W website.

"According to the most current data from the National Center for Education Statistics and Bureau of Labor Statistics, California schools spend $1,055 less per student than the national average. This means that our Davis schools currently receive $9.1 million annually less than the national average."

Remember that this below average spending occurs DESPITE the fact that the cost of living in California is considerably higher than in almost all other states.

Mr. Hulsizer writes:

"In September 2007, Stanford University researchers concluded that despite higher costs than almost all other states, California schools are funded 30 percent below the national average and a staggering $5,500 PER STUDENT below schools in New York State. The result is that California schools have the highest student-to-staff ratios (teachers and administrators) in the United States."

And he concludes:

"While Measure W will not bring Davis schools to the national average, this modest proposal will at least allow our schools to protect several core instructional programs that help our school district arguably be one of the finest in our region, if not the entire state. Moreover, 100% of Measure W funding will go to programs and services for our children."

I have spent many hours working to understand the city of Davis' fiscal situation. I have devote many columns to that. I agree here with Rich Rifkin in part in terms of fiscal responsibility. Where I might differ (although perhaps not) is that I believe the district has already taken the steps that Mr. Rifkin recommends to prevent the kind of problems that surfaced back in 2005 and 2006.

Moreover, I also believe that teachers as a whole in this society, are underpaid in terms of the jobs that they perform and the importance of those jobs to our society. The fact is that we have increased their wages and benefits over the last decade. I would argue that is a good thing. The bad thing is that the district prior to 2006 did not have good fiscal management practices. As I have gone into painstaking detail however, those issues have been resolved with both better personnel and better practices as recommended by FCMAT in 2006.

Finally the big picture is that we do not spend nearly enough on education in California, especially when you taken into account cost of living. And we are nowhere near the top in performance.

Davis voters get a chance to do two things. First, they get a chance to keep Davis schools great. And second, they get a chance to renew their commitment to excellence in education. We can find ways to save money in other aspects of our lives. We can hold the line on fiscal discipline in other ways that do not harm our children's ability to receive a quality education.

What has struck me in this debate is the 90 percent of the things that critics have suggested the district do, the district has already done. The other thing that has struck me in this debate is how many times discredited arguments are repeated with no acknowledgment that they have already been asked and answered. What that tells me is that people are looking for excuses to vote no on this measure rather than reasons to vote yes. That is unfortunate because the end result will be a cutback in the programs that make Davis schools what they are.

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